Wednesday, 18 February 2026

 Lauren KATHAGE (Yan Yean) (10:36): When the Public Accounts and Estimates Committee examined the 2025–26 budget estimates, the economic outlook was positive. Growth was strengthening, real wages were forecast to return and unemployment remained low even in the face of global uncertainty. The government set out a five-step fiscal strategy, which is recorded in the report: creating jobs; returning to an operating cash surplus, which we have done; returning to operating surpluses, which we are doing next; stabilising debt as a share of the economy; and then reducing debt. At that point, when the report was published, the numbers told us that improvement was underway. The updated figures now show that improvement is holding and strengthening. Household consumption has risen in the most recent quarter and is up more than 2 per cent over the year, business investment is contributing to stronger state final demand, and since June 2020 there are 123,000 more businesses operating in Victoria. That shows a very resilient economy.

Over the year to December, nearly 60,000 more Victorians are in work, our participation rate is one of the highest in the country, regional unemployment has fallen dramatically compared to a decade ago, and while employment growth is moderating from its post-pandemic highs, unemployment remains low by historical standards. The report noted that wages were expected to grow faster than inflation for the first time since 2019–20, and that is now occurring. Real wages are returning for families. That means relief, it means more confidence and it means stability. At the same time, we are strengthening the budget. The report highlighted that 2025–26 would see a return to an operating surplus, and we are delivering that surplus. Surpluses are projected across the forward estimates. Net debt as a proportion of gross state product peaks and then begins to fall – that is not accidental, it is the result of disciplined fiscal strategy. And it is important to remember what that borrowing funded, which is referred to in the report.

We supported families and businesses during COVID, and we invested in productive infrastructure that grows the economy and makes daily life easier. For communities like Yan Yean, that is not an abstract thing. When we upgrade roads, when we invest in public transport connections and when we build new schools, expand local health services and introduce free kinder we reduce the real cost of living. Shorter travel times mean less fuel spent. Reliable public transport means cheaper commuting. New schools close to home mean less time in traffic and more time with family. Expanded health services reduce long trips across the city to see doctors for appointments. That is economic policy in practical form.

The report made clear that stabilising debt depends on growing the economy. That growth does not happen in isolation; it happens when growth corridor communities like mine are connected, supported and able to participate fully in the workforce. When parents can get to work more easily, when young people can access education locally and when businesses can move goods efficiently, productivity rises, participation rises and economic output rises. That is how you strengthen the denominator in the debt-to-GSP ratio that the report refers to.

Our economy today is nearly 30 per cent larger than it was in 2015. By the end of the forward estimates it will approach $780 billion. As the economy grows, our capacity to service debt grows with it. So yes, we borrowed, but we borrowed to build. We are now seeing the return: jobs growth, business formation, real wage recovery and a budget back in surplus. The committee’s report set out the framework, and we can see from the numbers since then that that trajectory has been confirmed. That economic strength, fiscal discipline and investment in making life easier for families is the story of the budget of this government and for my community in Yan Yean.